12:44 PM EDT, 04/28/2025 (MT Newswires) -- The Texas manufacturing sector's contraction worsened this month to its lowest level since May 2020, while uncertainty grew amid potential tariffs impact, data from the Federal Reserve Bank of Dallas showed Monday.

The general business activity index slid to minus 35.8 in April from minus 16.3 last month. The consensus was for a minus 14.1 reading in a consensus compiled by Bloomberg.

The production index, which the Fed branch calls a key measure of state manufacturing conditions, declined to 5.1 from 6, suggesting modest growth, it said. New orders tumbled to minus 20 from minus 0.1, while the shipments index fell into negative territory for the first time this year at minus 5.5 from 6.1.

"Texas manufacturing production continued to grow in April, though the future is more uncertain as demand fell and outlooks worsened," Emily Kerr, senior business economist at the Dallas Fed, said in remarks e-mailed to MT Newswires. "Many contacts noted turmoil from trade policy."

The uncertainty index pushed up 10.9 points to 47.1, while the company outlook measure retreated to a post-pandemic low of minus 28.3. The raw materials price index climbed nearly 11 points to 48.4 in April, its highest reading since the middle of 2022, the data showed.

Earlier this month, US President Donald Trump announced sweeping new tariffs on imports from several nations, including China and Japan. Trump later declared a 90-day pause on duties for non-retaliating countries. However, the US and China have been in a deadlock, having raised tariffs on each other's goods multiple times.

"Nearly 60% of firms expect higher tariffs to have a negative impact on their business this year, a much higher share than when tariffs were implemented in 2018-19," Kerr said. "More widespread cost and price increases are expected this time as well, and more firms anticipate a decrease in output and employment."

Six months out, expectations for general business activity pushed further into contract territory at minus 15.2 in April from minus 6.6 last month, while the future production index retreated to 14.8 from 27.6, according to the Fed branch's report.

The forward-looking indicator for new orders plummeted about 18.5 points sequentially to 10.1, while the shipments gauge decreased 8.5 points to 13.2.